PRUDENTIAL INSURANCE CO. OF AMERICA v. JEFFERSON ASSOCIATES, LTD., Supreme Court of Texas (1995)

FACTS: In 1983, Prudential Insurance Company of America, an insurance company located in the Jefferson Building in Austin, TX, offered the building for sale through a proposed contract, closed bidding process. F. B. Goldman, a wealthy real estate investor in Austin, had previously expressed his desire to purchase the property before but never was successful. Upon submitting a bid on the building in 1983, Goldman hired three different inspectors to inspect the building: the maintenance supervisor Timmy Don Kirk, Donna Buchanan the property manager, and an independent professional engineering firm. Donna Buchanan stated that despite the building having a mechanical room foundation issue, the building was in “superb,” “super fine,” and “one of the finest little properties in the City of Austin. Timmy Don Kirk stated that Donna Buchanan informed him that the building had no other defects. After receiving these inspection reports, Goldman submitted an offer to purchase the Jefferson Building in an “as is” condition from Prudential Insurance for $7,150,000. In addition, the purchaser, Goldman, understood that no express or implied warranties would be provided by Prudential Insurance and any action under the Texas Deceptive Trade Practices Act to recover any consequential damages from the seller, Prudential Insurance would be waived. In 1984, Prudential Insurance accepted Goldman’s proposed contract and awarded him ownership of the building. Goldman, two years later, discovered that the Jefferson Building, a four story office building, contained Asbestos Fireproofing which he believed impaired the building’s overall value. After discovering the building’s true condition, Goldman inquired about the building’s plans and specifications to Donna Buchanan but was mistakenly given the “as-built” drawings. Buchanan referred Goldman to the building’s architects for additional information, however, no contact about building plans were made from any party following. 

PROCEDURAL HISTORY: Goldman sued Prudential Insurance Co. of America for violating the Texas Deceptive Trade Practices Act on the basis of fraud, negligence, and breach of the duty of good faith and fair dealing for concealing material facts within the agreement. The trial court found the difference in consideration between what Goldman paid and the value of the building he received was $6,023,993.03, thus, awarding him this. Also, the court awarded Goldman punitive damages of $14,300,000.00. After interest, costs and attorney fees, Goldman was awarded $25,692,571.58. The court of appeals affirmed this decision. Prudential Insurance then petitioned to the Texas Supreme Court.

ISSUE(S): 

1. Whether a person could collect damages from purchasing a building in an “as is” state, when it’s later determined that the building was in a different condition than the buyer initially believed it to be in and no proof to support that the previous building owners intentionally concealed the defect.  

HOLDING: 

1. A person can’t collect damages from purchasing a building in an “as is” state, when it’s later determined that the building was in a different condition than the buyer initially believed it to be in and no proof to support that the previous building owners intentionally concealed the defect.  

REASONING: Because Goldman agreed to purchase the building “as is,” there is no evidence to support Goldman’s claim that Prudential Insurance caused him damages by intentionally withholding information regarding asbestos fireproofing. By purchasing the building “as is,” Goldman accepted any risks and defects associated with the building, even if it altered its value, and was responsible, as the buyer, to adequately inspect the building before purchasing. Since there’s no evidence to support that Prudential Insurance knew of the asbestos fireproofing at the time of entering the agreement with Goldman, they aren’t responsible for disclosing this information to Goldman. Lastly, because no warranties were made outside of those relating to the title, Goldman’s claim that Prudential Insurance violated the Texas Deceptive Trade Practices Act is not supported by evidence. 

JUDGMENT: The Supreme Court of Texas reversed the judgment of the court of appeals and rendered a judgment in that Goldman was entitled to no damages.